Especially the amount of bonds issued by banks was considerable: EUR 63 billion against EUR 29 billion in redemptions. This marked a reversal of the pattern seen in 2008, when banks redeemed more than they issued. This reversal is also attributable to the deposit guarantee scheme set up by the government: EUR 31 billion out of the EUR 63 billion issued concerned state-guaranteed paper.
The considerable issue of government paper (EUR 27 billion) was related to the refinancing of short-term debt securities which the government had issued to finance its interventions in the financial sector. The surge in the issue of corporate bonds (EUR 16 billion) was prompted by the reduced tension on the capital market, which rekindled investors’ interest in corporate bonds.
Finally, just as in previous periods, other financial institutions issued large quantities of bonds (EUR 33 billion), mostly by way of special purpose vehicles, or SPVs. SPVs are entities predominantly set up by banks to turn assets like residential mortgages and corporate loans into tradeable securities (securitisation). Since the credit crisis, the vast majority of buyers of bonds issued by SPVs are no longer investors but banks themselves, wishing to post the securities concerned as collateral for ECB funding and thereby satisfy their liquidity needs.